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Price action has not confirmed a new downtrend off the recent high. And the initial downside target for this move has been met which is the fill of the large gap up from a couple weeks ago, which I had mentioned a few days ago.
Stocks reversed upward after a gap down opening today and basically held support. It was by no means a solid reversal with overall price losses, more declining issues than advancing and more new lows than new highs. However, given the price technical analysis and tendency for the market to rise into options expiration, it may be sensible to assume the market will bounce from the fill of that large gap up, and relieve the short-term oversold conditions.
The intricacies of the price pattern suggest to me that this rally will probably NOT make a new rally high, but may come close. If looking to short, the ideal would be for the market to move back up and show overbought stochastics on the hourly chart and make an hourly MACD cross down from above the zero line. If trading long from here, I would suggest a logical trailing stop method on the position because the market appears vulnerable to a sharp decline without new rally price highs.
A retracement of the recent decline from July 5th in less time than it took to form would be confirmation of a continuing uptrend.
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